Tag: Medicare Advantage

Biden Plan to Save Medicare Patients Money on Drugs Risks Empty Shelves, Pharmacists Say

Months into a new Biden administration policy intended to lower drug costs for Medicare patients, independent pharmacists say they’re struggling to afford to keep some prescription drugs in stock.

“It would not matter if the governor himself walked in and said, ‘I need to get this prescription filled,’” said Clint Hopkins, a pharmacist and co-owner of Pucci’s Pharmacy in Sacramento, California. “If I’m losing money on it, it’s a no.”

A regulation that took effect in January changes prescription prices for Medicare beneficiaries. For years, prices included pharmacy performance incentives, possible rebates, and other adjustments made after the prescription was filled. Now the adjustments are made first, at the pharmacy counter, reducing the overall cost for patients and the government. But the new system means less money for pharmacies that acquire and stock medications, pharmacists say.

Pharmacies are already struggling with staff shortages, drug shortages, fallout from opioid lawsuits, and rising operating costs. While independent pharmacies are most vulnerable, some big chain pharmacies are also feeling a cash crunch — particularly those whose parent firms don’t own a pharmacy benefit manager, companies that negotiate drug prices between insurers, drug manufacturers, and pharmacies.

A photo of a man in a white pharmacist's coat smiling for a photo.
“It would not matter if the governor himself walked in and said, ‘I need to get this prescription filled,’” says Clint Hopkins, a Sacramento, California, pharmacist. “If I’m losing money on it, it’s a no.”(Joel Hockman)

A top official at the Centers for Medicare & Medicaid Services said it’s a matter for pharmacies, Medicare insurance plans, and PBMs to resolve.

“We cannot interfere in the negotiations that occur between the plans and pharmacy benefits managers,” Meena Seshamani, director of the Center for Medicare, said at a conference on June 7. “We cannot tell a plan how much to pay a pharmacy or a PBM.”

Nevertheless, CMS has reminded insurers and PBMs in several letters that they are required to provide the drugs and other benefits promised to beneficiaries.

Several independent pharmacists told KFF Health News they’ll soon cut back on the number of medications they keep on shelves, particularly brand-name drugs. Some have even decided to stop accepting certain Medicare drug plans, they said.

As he campaigns for reelection, President Joe Biden has touted his administration’s moves to make prescription drugs more affordable for Medicare patients, hoping to appeal to voters troubled by rising health care costs. His achievements include a law, the Inflation Reduction Act, that caps the price of insulin at $35 a month for Medicare patients; caps Medicare patients’ drug spending at $2,000 a year, beginning next year; and allows the program to bargain down drug prices with manufacturers.

More than 51 million people have Medicare drug coverage. CMS officials estimated the new rule reducing pharmacy costs would save beneficiaries $26.5 billion from 2024 through 2032.

Medicare patients’ prescriptions can account for at least 40% of pharmacy business, according to a February survey by the National Community Pharmacists Association.

Independent pharmacists say the new rule is causing them financial trouble and hardship for some Medicare patients. Hopkins, in Sacramento, said that some of his newer customers used to rely on a local grocery pharmacy but came to his store after they could no longer get their medications there.

The crux of the problem is cash flow, the pharmacists say. Under the old system, pharmacies and PBMs reconciled rebates and other behind-the-scenes transactions a few times a year, resulting in pharmacies refunding any overpayments.

Now, PBM clawbacks happen immediately, with every filled prescription, reducing pharmacies’ cash on hand. That has made it particularly difficult, pharmacists say, to stock brand-name drugs that can cost hundreds or thousands of dollars for a month’s supply.

Some patients have been forced to choose between their pharmacy and their drug plan. Kavanaugh Pharmacy in Little Rock, Arkansas, no longer accepts Cigna and Wellcare Medicare drug plans, said co-owner and pharmacist Scott Pace. He said the pharmacy made the change because the companies use Express Scripts, a PBM that has cut its reimbursements to pharmacies.

“We had a lot of Wellcare patients in 2023 that either had to switch plans to remain with us, or they had to find a new provider,” Pace said.

A photo of a man smiling in front of shelves of prescriptions indoors.
Pharmacist Scott Pace, of Little Rock, Arkansas, no longer accepts two Medicare drug plans because of low reimbursements.(Kori Gordon)

Pace said one patient’s drug plan recently reimbursed him for a fentanyl patch $40 less than his cost to acquire the drug. “Because we’ve had a long-standing relationship with this particular patient, and they’re dying, we took a $40 loss to take care of the patient,” he said.

Conceding that some pharmacies face cash-flow problems, Express Scripts recently decided to accelerate payment of bonuses for meeting the company’s performance measures, said spokesperson Justine Sessions. She declined to answer questions about cuts in pharmacy payments.

Express Scripts, which is owned by The Cigna Group, managed 23% of prescription claims last year, second to CVS Health, which had 34% of the market.

In North Carolina, pharmacist Brent Talley said he recently lost $31 filling a prescription for a month’s supply of a weight control and diabetes drug.

To try to cushion such losses, Talley’s Hayes Barton Pharmacy sells CBD products and specialty items like reading glasses, bath products, and books about local history. “But that’s not going to come close to making up the loss generated by the prescription sale,” Talley said.

His pharmacy also delivers medicines packaged by the dose to Medicare patients at assisted living facilities and nursing homes. Reimbursement arrangements with PBMs for that business are more favorable than for filling prescriptions in person, he said.

A photo of a man in a button-up shirt and tie smiling for a photo indoors.
Brent Talley, a Raleigh, North Carolina, pharmacist, says that, while his store sells a variety of specialty items, “that’s not going to come close to making up the loss generated by the prescription sale.”(Elizabeth Talley)

When Congress added drug coverage to Medicare in 2003, lawmakers privatized the benefit by requiring the government to contract with commercial insurance companies to manage the program.

Insurers offer two options: Medicare Advantage plans, which usually cover medications, in addition to hospital care, doctor visits, and other services; as well as stand-alone drug plans for people with traditional Medicare. The insurers then contract with PBMs to negotiate drug prices and pharmacy costs with drug manufacturers and pharmacies.

The terms of PBM contracts are generally secret and restrict what pharmacists can tell patients — for example, if they’re asked why a drug is out of stock. (It took an act of Congress in 2018 to eliminate restrictions on disclosing a drug’s cash price, which can sometimes be less than an insurance plan’s copayment.)

The Pharmaceutical Care Management Association, a trade group representing PBMs, warned CMS repeatedly “that pharmacies would likely receive lower payments under the new Medicare Part D rule,” spokesperson Greg Lopes said. His group opposes the change.

Recognizing the new policy could cause cash-flow problems for pharmacies, Medicare officials had delayed implementation for a year before the rule took effect, giving them more time to adjust.

“We have heard pharmacies saying that they have concerns with their reimbursement,” Seshamani said.

But the agency isn’t doing enough to help now, said Ronna Hauser, senior vice president of policy and pharmacy affairs at the National Community Pharmacists Association. “They haven’t taken any action even after we brought potential violations to their attention,” she said.

Au Revoir, Public Health Emergency

The Host

The public health emergency in effect since the start of the covid-19 pandemic will end on May 11, the Biden administration announced this week. The end of the so-called PHE will bring about a raft of policy changes affecting patients, health care providers, and states. But Republicans in Congress, along with some Democrats, have been agitating for an end to the “emergency” designation for months.

Meanwhile, despite Republicans’ less-than-stellar showing in the 2022 midterm elections and broad public support for preserving abortion access, anti-abortion groups are pushing for even stronger restrictions on the procedure, arguing that Republicans did poorly because they were not strident enough on abortion issues.

This week’s panelists are Julie Rovner of KHN, Victoria Knight of Axios, Rachel Roubein of The Washington Post, and Margot Sanger-Katz of The New York Times.

Among the takeaways from this week’s episode:

  • This week the Biden administration announced the covid public health emergency will end in May, terminating many flexibilities the government afforded health care providers during the pandemic to ease the challenges of caring for patients.
  • Some of the biggest covid-era changes, like the expansion of telehealth and Medicare coverage for the antiviral medication Paxlovid, have already been extended by Congress. Lawmakers have also set a separate timetable for the end of the Medicaid coverage requirement. Meanwhile, the White House is pushing back on reports that the end of the public health emergency will also mean the end of free vaccines, testing, and treatments.
  • A new KFF poll shows widespread public confusion over medication abortion, with many respondents saying they are unsure whether the abortion pill is legal in their state and how to access it. Advocates say medication abortion, which accounts for about half of abortions nationwide, is the procedure’s future, and state laws regarding its use are changing often.
  • On abortion politics, the Republican National Committee passed a resolution urging candidates to “go on the offense” in 2024 and push stricter abortion laws. Abortion opponents were unhappy that Republican congressional leaders did not push through a federal gestational limit on abortion last year, and the party is signaling a desire to appeal to its conservative base in the presidential election year.
  • This week, the federal government announced it will audit Medicare Advantage plans for overbilling. But according to a KHN scoop, the government will limit its clawbacks to recent years, allowing many plans to keep the money it overpaid them. Medicare Advantage is poised to enroll the majority of seniors this year.

Also this week, Rovner interviews Hannah Wesolowski of the National Alliance on Mental Illness about how the rollout of the new 988 suicide prevention hotline is going.

Plus, for “extra credit,” the panelists suggest health policy stories they read this week that they think you should read, too:

Julie Rovner: Axios’ “Republicans Break With Another Historical Ally: Doctors,” by Caitlin Owens and Victoria Knight

Margot Sanger-Katz: The New York Times’ “Most Abortion Bans Include Exceptions. In Practice, Few Are Granted,” by Amy Schoenfeld Walker

Rachel Roubein: The Washington Post’s “I Wrote About High-Priced Drugs for Years. Then My Toddler Needed One,” by Carolyn Y. Johnson

Victoria Knight: The New York Times’ “Emailing Your Doctor May Carry a Fee,” by Benjamin Ryan

Also mentioned in this week’s podcast:


To hear all our podcasts, click here.

And subscribe to KHN’s What the Health? on SpotifyApple PodcastsStitcherPocket Casts, or wherever you listen to podcasts.

KHN’s ‘What the Health?’: Finally Fixing the ‘Family Glitch’


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The Biden administration this week issued regulations aimed at fixing the Affordable Care Act’s “family glitch,” which has prevented families that can’t afford their employer insurance from getting subsidized coverage from the insurance marketplaces. The Obama administration had decided that only Congress could fix the glitch.

Meanwhile, open enrollment for Medicare begins Oct. 15, when beneficiaries can join or change private Medicare Advantage plans or stand-alone prescription drug plans. For the first time, Medicare Advantage plans are poised to enroll more than half of the Medicare population despite allegations that many of the largest insurers are getting billions of dollars in overpayments from the federal government.

This week’s panelists are Julie Rovner of KHN, Margot Sanger-Katz of The New York Times, Joanne Kenen of the Johns Hopkins Bloomberg School of Public Health and Politico, and Rachel Cohrs of Stat.

Among the takeaways from this week’s episode:

  • The “family glitch” arose because under ACA rules, people offered insurance through their workplace generally don’t qualify for subsidies if they instead purchase a policy on the marketplace — unless their work insurance is deemed unaffordable. That determination was made based on the cost of insurance for the individual worker, not what a family policy would cost. Since family policies are considerably more expensive than individual policies, they are often unaffordable for workers. The new federal regulation will take into account the cost of the family coverage.
  • Democrats were aware of this problem even as they passed the ACA. But this is an expensive change, and they were desperate to keep the cost of the bill below $1 trillion. They had promised to fix the “family glitch” but had not done it.
  • Many health policy experts believed the fix would need to be made by Congress, but the Biden administration opted to do it through regulation. Whether the regulation will face legal challenges from critics is not clear, but opponents may have a hard time proving they are being harmed by the new rule and have standing to bring a lawsuit.
  • Many seniors are happy with their Medicare Advantage plans, which often offer more benefits than traditional Medicare at a reduced cost. Enrollees, however, generally must stay within a plan’s network of health care providers.
  • Questions have been raised about federal payments to the plans. They were initially envisioned as a way to save money because lawmakers thought they would be more efficient than the government-run plan. But the benchmark formula for the plans now gives them more than 100% of what the government would pay for an average person in traditional Medicare, and the government pays the plans bonuses for taking on sicker patients.
  • Those bonuses have been the subject of numerous government investigations, whistleblower allegations, and some fraud lawsuits that allege the plans misidentify enrollees’ medical conditions to get higher reimbursements from the government. But while some watchdog groups have raised concerns, the Centers for Medicare & Medicaid Services has not made major changes to the reimbursement formulas, partly because Medicare Advantage has high patient satisfaction and bipartisan support on Capitol Hill.
  • As lawmakers get closer to Election Day next month, Democrats have trumpeted their support for abortion rights and hit hard at Republicans who supported the Supreme Court’s decision to overturn Roe v. Wade, which had guaranteed access across the country. The Democrats, however, have not been as active in making a case for their passage of the Inflation Reduction Act, which offered several popular changes, including caps on out-of-pocket drug expenses for Medicare beneficiaries, a provision allowing Medicare to begin negotiating the price of some drugs, and an extension of enhanced subsidies for people who buy insurance on the ACA marketplaces.
  • Democrat John Fetterman’s campaign for a U.S. Senate seat from Pennsylvania has been slowed down a bit by his recovery from a stroke he had earlier this year. He is back on the trail and is making live appearances, but he uses a computer device to help him translate conversations into written language because he says his auditory processing has not healed. Critics have said he should be more transparent with his medical records. Disability advocates have hit back against the criticism of Fetterman.

Plus, for extra credit, the panelists recommend their favorite health policy stories of the week they think you should read:

Julie Rovner: KHN’s “If You’re Worried About the Environment, Consider Being Composted When You Die,” by Bernard J. Wolfson

Margot Sanger-Katz: KHN’s “Baby, That Bill Is High: Private Equity ‘Gambit’ Squeezes Excessive ER Charges From Routine Births,” by Rae Ellen Bichell

Joanne Kenen: The Food & Environmental Reporting Network’s “For One Historically Black California Town, a Century of Water Access Denied,” by Teresa Cotsirilos 

Rachel Cohrs: Stat’s “A Miniscule New HHS Office Has a Mammoth Goal: Tackling Environmental Justice,” by Sarah Owermohle

Also mentioned in this week’s episode:


To hear all our podcasts, click here.

And subscribe to KHN’s What the Health? on Spotify, Apple Podcasts, Stitcher, Pocket Casts, or wherever you listen to podcasts.

KHN’s ‘What the Health?’: Biden Declares the Pandemic ‘Over’


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President Joe Biden’s declaration in a national interview that the covid-19 pandemic is “over” has complicated his own administration’s efforts to get Congress to provide more funding for treatments and vaccines, and to get the public to go get yet another booster.

Meanwhile, concerns about a return of medical inflation for the first time in a decade is helping boost insurance premiums, and private companies are scrambling to claim their piece of the health care spending pie.

This week’s panelists are Julie Rovner of KHN, Anna Edney of Bloomberg News, Joanne Kenen of the Johns Hopkins Bloomberg School of Public Health and Politico, and Lauren Weber of KHN.

Among the takeaways from this week’s episode:

  • Biden’s comment to “60 Minutes” that the pandemic was over — even though covid is still an issue — highlights the difficulty in communicating to the public how to transition from a public health crisis to a public health problem.
  • Much of the country may agree with the president, as evidenced by fewer people using face masks regularly and a decreased number of commercial restrictions related to covid. But several hundred people are still dying each day, a high toll often overlooked.
  • Insurance premiums appear to be on the upswing this fall, even though medical costs have not been rising as quickly as other parts of the economy in recent months. The increase may reflect insurers’ concerns that, coming out of the covid crisis, consumers will be seeking more medical services.
  • One aspect of health business that is driving up costs is the increased investment by private equity companies, which are expanding their reach beyond emergency room doctors and a few other specialties to a wider range of medical services, including gastroenterology and ophthalmology.
  • Another concern for the future of health costs is the move toward consolidation in health care. Among recent developments on that front were Amazon’s announcement it is moving into primary care with the purchase of One Medical and CVS’ decision to buy home health care company Signify Health.
  • Abortion policies continue to make news in various states. West Virginia passed a law that restricts nearly all abortions; several Utah Republican legislators sent cease-and-desist letters to abortion providers in their state; and Puerto Rico has a new political party campaigning on the issue of trying to curb the commonwealth’s liberal abortion law.
  • While Democrats hope the issue of abortion will swing more voters their way in the midterm elections, it’s not clear whether overall support for abortion will be a deciding issue for voters in more conservative states and bring any changes.

Plus, for extra credit, the panelists recommend their favorite health policy stories of the week they think you should read, too:

Julie Rovner: The Anchorage Daily News’ “Many Alaska Pharmacies Are Understaffed, Leading to Sporadic Hours and Patients Turned Away,” by Annie Berman

Joanne Kenen: Capital B’s “Clinicians Dismiss Black Women’s Pain. The Consequences Are Dire,” by Margo Snipe

Anna Edney: The Guardian’s “Fury Over ‘Forever Chemicals’ as US States Spread Toxic Sewage Sludge,” by Tom Perkins

Lauren Weber: KHN’s “Doctors Rush to Use Supreme Court Ruling to Escape Opioid Charges,” by Brett Kelman

Also mentioned in this week’s episode:


To hear all our podcasts, click here.

And subscribe to KHN’s What the Health? on Spotify, Apple Podcasts, Stitcher, Pocket Casts, or wherever you listen to podcasts.